SOUTH ASIAN ASSOCIATION FOR

PROJECT REGIONAL CORPORATION

Submitted to:

Sir Samee Ullah Khan Lashari

Submitted by:

Aleena Javaid CIIT/FA08-BBA 10 B-011/LHR

Submission Date:

BBA BATCH# 10-B, Department of Management

COMSATS INSTITUTE OF INFORMATION TECHNOLOGY

Sr. no. Contents Page no.

2 Introduction & Evolution

3 Principles

4 Objectives

5 History

6 Financial arrangements in SAARC

7 Trade and economic cooperation

8 Regional conventions agreements

9 Why SAARC a failure?

10 conclusion

11

12

13

14

15
 INTRODUCTION & EVOLUTION:

SAARC (South Asian Association for Regional Cooperation) was established on December 8,
1985 by seven countries of Asia named as Pakistan, Bhutan, Bangladesh, Maldives, India, and
Sri Lanka. This is an economic organization of eight countries of Southern Asia. SAARC is an
evident of the determination of the people of South Asia to work together towards finding
solutions to their common problems in a spirit of friendship, trust and understanding and to
create and order based on mutual respect, equity and shred benefits. The main purpose of this
association is to increase the progress of economic and social development in member states,
through joint action in the agreed areas of cooperation. In April 3, 2007 Afghanistan became the
8th member. The people of its member countries are around 1.5 billion. In terms of population its
sphere of influence.1 (is an area or region over which a state or organization has significant
cultural, economic, military or political influence) is largest of any regional organization. The
headquarters of SAAC are Katmandu and Nepal. Chairman and secretary General are Mahinda
Rajapaksa and Sheel Kant Sharma respectively. The GDP in 2005 was estimated as US
$4074031 million and per capita US $ 2777.2

PRINCIPLES13):

SAARC was adopted.

2 . Such cooperation shall not be a substitute for bilateral and multilateral cooperation but shall
complement them.

3. Such cooperation shall not be inconsistent with bilateral and multilateral obligations.

1
Charter of SAARC , article 2 (www.sarc-sec.org/main.php?id=10&t=4)
2

3
OBJECTIVES:
The objectives of the association in charter are:4

• To promote the welfare of the people of South Asia and to improve their quality of life;
• To accelerate economic growth, social progress and cultural development in the
region and to provide all individuals the opportunity to live in dignity and to realize their
full potential;
• To promote and strengthen collective self-reliance among the countries of South Asia;
• To contribute to mutual trust, understanding and appreciation of one another's
problems;
• To promote active collaboration and mutual assistance in the economic, social,
cultural, technical and scientific fields;
• To strengthen cooperation with other developing countries;
• To strengthen cooperation among themselves in international forums on matters of
common interest; and
• To cooperate with international and regional organizations with similar aims and
purposes.

HISTORY:
In 1970 Ziaur Rehman president of Bangladesh presented an idea of creation of a trade bloc and
the member of this bloc would be the countries of South Asia. This idea was again presented in
assembly in May 1980. In April 1981, the foreign secretaries of the member countries met for the
first time in Colombo. The aim of this association is to promote the welfare of the people of the
member countries through increased economic, social and cultural development. In 1983 in New
Delhi, the first summit meeting was held and the key agreement of saarc was Integrated Program
of Action (IPA). The (IPA) agreed to cooperate on twelve areas: agriculture, rural development,
meteorology, health, population activities, transport, postal services, scientific and technological
cooperation, sports, arts and culture. At the 10th summit meeting held in 1998 in Colombo, Sri
Lanka, the leaders of the member countries agreed to establish the SAARC Information Centre
(SIC) which is located in Nepal as an information hub for SAARC countries. In January 2006 an
agreement was signed (SAFTA) South Asia Free Trade Area which came into force replacing the
(SAPTA) South Asia Preferential Trade Agreement enhancing integration process? Regional
collaboration in finance, trade and investment was being pursued in order to establish (SAEU)
South Asian Economic Union.5

FINANCIAL ARRANGEMENTS IN SAARC:

5
Charter of SAARC , article 1 (www.sarc-sec.org/main.php?id=10&t=4
The member states contribute the balance according to an agreed formula, while the host country
pays a minimum balance. For example, in 1993, when the building of secretariat was under
construction the host country paid the 40% of the balance and the rest of the balance was shared
according to the agreed formula.

TRADE AND ECONOMIC COOPERATION:

SAARC has taken important steps to expand in the core economic areas among the member
countries. The council of ministers endorsed the study and decided to set up high level committee
on (CEC) committee on economics cooperation on the ninth session in July 1991 in Malaysia.

At the summit meeting in Colombo in December 1991, the head of states of the member
countries approved the establishment of (IGG) to seek agreements on an institutional framework
under which trade liberation among its members. In the four meetings of IGG , in the
negotiations among the member states exchanged the concessions to be offered/sought. The
council of ministers at its 15th meeting session agreed that the full and timely realization of the
benefits of regional economic cooperation required.
3)
(a) the implementation of other related measures such as the removal of Para-tariff, non-tariff
and other trade control barriers within the specific timeframes and
(b) eventual progression to the creation of a free-trade area in the region.

The head of state or govt. at the 8th summit meeting in Delhi 1995 aid that the first round of trade
under SAPTA has been completed. CEC at its 6th summit meeting in 1995 in Delhi recommended
that with the operationalisation of SAARC (SAPTA) ,it is now desirable to work toward removal
of para-tarriff and non-tariff barriers widening and deepening the tariff cuts and expanding the
list of products to be included for intra-SAARC preferential trade under SAPTA. It
recommended that to push the SAPTA process forward ,the IGG on trade Liberalization be call
together to conduct the 2nd round of trade negotiations under SAPTA and proposed that the 1st
meeting of the 2nd round can take place in 1996 .
6

6
REFRENCE:
2) http://actrav.itcilo.org/actrav-english/telearn/global/ilo/blokit/saarc.htm
 The following fields have also been taken toward promoting trade cooperation within the
region:

• Cooperation in the field of Handicrafts and Cottage Industries

 SAARC Chamber of Commerce and Industry (SCCI)

(SCCI) was recognized in December 1992 by SAARC. The head quarters are established at
Karachi and the national units in all seven countries. First president of SCCI was MR. S.M Inam.
SCCI will act as a dynamic instrument of promoting regional cooperation in the area of trade and
economic relations.

The SAARC Chamber has been instrumental in disseminating the information about the content,
scope, and potential of the Framework Agreement on SAARC (SAPTA) among the business
community in the region. It has organized its aegis, various seminars on SAPTA in the member
countries for this purpose. In December 1994 a regional seminar on SAPTA was organized in
Katmandu by Federation of Nepalese Chambers of Commerce and Industry in cooperation with
the SAARC Chamber of Commerce and Industry and Friedrich-Naumann-Stiftung.

The delegations of SCCI, headed by their president and comprising representatives of the
national Federations of Chambers of Commerce and Industry of SAARC Member States, they
have visited Germany and Japan for expanding the exports from the SAARC region to the EU
and Japan.

To expand the activities of the SCCI in the field of promoting trade both within and outside the
region of SAARC, has decide to its recognition to SCCI for a period of 5 years.

In October 1995 Mr. Salman F. Rahman was elected the president of SCCI.
 REGIONAL CONVENTIONS/AGREEMENTS

1. Agreement on Establishing the SAARC Food Security Reserve (SFSR)

In 1987 Katmandu, during the 3rd summit meeting of SAARC, an agreement was signed on
establishing the SAARC food security reserve. An agreement came into force on 12 August
1988, provided for a reserve of food grains for the emergency use. The reserve’s size is 241580
tones.

The member countries of the food reserve board meet once a year. The main function of this
board is to take review of the assement of the situation of food like production, consumption,
trade, prices, quality and stocks of food grains.

2. SAFTA (South Asian free trade Agreement):

On January 6 2004, the SAARC member countries signed the agreement on SAFTA , their aim
was to create a free trade zone about 1.5 billion people.

The SAFTA requires the three developing countries in South Asia (India, Pakistan and Sri
Lanka) to bring their duties to zero by 2012 in a series of annual cuts. The LCDs of South Asia
consisting of Nepal, Bhutan, Bangladesh and the Maldives have an additional three years to
reduce tariffs to zero.

It's need for the SAARC to make the SAFTA more effective considering the fact that inter-trade
among SAARC countries now accounts for only about 5% of the members' total trade, while the
figure for the EU is 55% and the NAFTA (North America Free Trade Area) is 61 %.

3. Agreement on SAARC Preferential Trading Arrangement (SAPTA):

On 11 April 1993 during the seventh summit meeting of SAARC the agreement on SAPTA was
signed by the member states.
During the 6th summit meeting the initiative was taken to establish the SAPTA in December
1991. This agreement provides step by step liberalization of intra-regional trade... It considers the
periodic rounds of trade negotiations for exchange of trade concessions on tariff, Para-tariff and
non-tariff measures.

In SAARC region the SAPTA provide the special and favorable treatment to LDCs. Provisions
for safeguard actions and BOP are also incorporated in agreement to protect the interest of the
member states during critical economic circumstances.

An IGG on Trade Liberalization completed the 1st round of trade negotiations at its 6th summit
Meeting held at the SAARC Secretariat, Katmandu on 20-21 April 1995. It finalized the
Consolidated National Schedules of Concessions which were approved by the 5th Session of the
Council of Ministers held on 30 April - 1 May 1995 in New Delhi. The SAPTA Agreement has
since been by Member States and will enter into force on 7th December 1995. The Committee of
Participants has since been established and will meet in the third quarter of 1996 to review the
progress in the implementation of the SAPTA Agreement.

FUTURE OF SAARC:
The future of SAARC seems to have been vanished. The reason is that the culture of the member
countries is not same, the people to people contact is very limited and major reason is India’s
attitude towards the member countries. The reason is that the relations between the member
countries is not good, the don’t cooperate with each other and the main reason is India.

REFRENCE:
http://pakistantimes.net/2004/01/13/guest1.htm
BY MR. Asim Naeem ‘s column in Pakistan Time
Why SAARC has been a failure?
1). Clash of civilizations:

Prof. Samuel Huntington has mentioned in his book “the clash of civilizations” that SAARC has
been a failure because according to him the countries that belong to associations like EU etc they
belong to same culture but SAARC belongs to those countries whose cultures are different. India
and Pakistan are foes of each other, they fight on pity things, and then how can these two
countries help each other in one association……. The one country does not have feeling of
belonging with the other area or state.

2). People to people contact:

The contact of the people with the association is zero and as well as with the people of the
member countries .they don’t know when was the association made and that was the purpose
then how can they join together to help their own state solve their problems……

3). Pathetic condition of the south Asia:

260 million inhabitants of the south Asia lack basic facilities in south Asia and it the most
deprived region too. 337 million people lack safe drinking water: 830 million are without
rudimentary sanitation and 400 million go hungry every day. SAARC is the most militarized
place in world; its two countries Pakistan and India are spending $ 30 billion on their defense
expense. Afghanistan, it’s newly member is facing war from last 30 years. In view of these all
major problems how such association cans can successfully work.

4). Trade:

All the south Asian countries look up to India to share it s huge markets because of its size and
location, where 80% of the of the intra-regional trade in south Asia is to or from India. India
blames the failure of SAFTA on Pakistan but its not true at all because SAFTA requires India,
Pakistan and Sri Lanka to bring their duties down to 20% in the two year period ending in 2007.
The 20% duty in the final phase ending in 2012 will be reduced to zero.
During the fiscal period of 2006-2007, the exports of India were in billion dollars but their
imports were no more than $350 million. This shows that that how one country wants to put the
others duty to 0.
5). Different Political system:

The different kind of politics in the member states is also the reason of the failure of SAARC. In
south Asia their hadn’t been a strong democratic region. Like in India there is democracy, in
Pakistan there is transitional democracy, kingship in Nepal and presidential system in Sri
Lanka.

The most countries have remained unstable in the past and the future. The dispute between the
two countries India and Pakistan over Kashmir issue has never let these two giant countries of
the south Asia to go along well and set aside their differences on the SAARC forum.

A part from this the India has dome disputes with its rest of the member countries like Pakistan ,
Bangladesh , Nepal , Bhutan , and th9is thing also hasn’t helped SAARC cause.

Conclusion:
SAARC is the weakest regional organization of the world its population is 1.5 billion, its
problems are numerous and they demand urgent solution. The bigger countries should look after
the LDCs. the goals should be made realistic, so that they can easily be achieved.